Profits at budget airline Ryanair topped €300 million in the 12 months to the end of March, the company said yesterday. Barry O'Halloran reports.

Dublin and London-listed Ryanair reported that after-tax profits during the year grew 12 per cent to €302 million from €268 million.

Pretax profits grew at a slower rate, reaching €339 million from €309 million. Earnings per share were up 11 per cent at 39.32 cent from 35.28 cent.

Revenues were up 28 per cent to €1.69 billion from €1.3 billion. During the year, the company carried 35 million passengers, 26 per cent more than in the 12 months to the end of March 2005, when it had 27 million passengers.

Ryanair said as revenue grew faster than passenger numbers, revenue per passenger increased by 2 per cent. It attributed the strong revenues to the launch of new routes and an average 1 per cent increase in fares. The results were ahead of expectations, with profits coming in €7 million ahead of most predictions.

Operating expenses were up 34 per cent at €1.3 billion. This was the result of increased activity and rising fuel prices. The airline's bill jumped 74 per cent to €462.5 million. Excluding this, Ryanair said that unit costs fell by 6 per cent. The airline has a hedging agreement that means it will buy 90 per cent of its oil needs at an average of $70 (€54.60) a barrel from this month until October.

Head of treasury, Neil Sorahan, said yesterday that it covered this period because it is the busiest of the year for the airline and it also coincides with hurricane season in the Caribbean Gulf of Mexico.

"Oil prices tend to increase during the hurricane season," he said yesterday.

The airline has tended not to hedge its oil needs in the past, and two years ago said its profitability would not be affected until the price reached $80 a barrel.

Mr Sorahan said yesterday that it could cope with higher prices as the company was more profitable than it was two years ago.

It has not hedged oil prices beyond October. Chief executive Michael O'Leary said that it would continue looking for future hedging opportunities, but would only take them if the price was right. Ryanair has not levied fuel surcharges on its customers to compensate for rising oil costs. Mr O'Leary argued yesterday that this was central to its performance and profitability.

"The key to Ryanair's traffic and profit growth was our refusal to levy fuel surcharges on our passengers at a time when most other airlines in Europe are introducing or increasing them," he said.

He added that this policy was driving "millions of passengers" to Ryanair and pledged that the company would keep absorbing higher oil prices. Cash flow was €599 million, and was used partly to pay for new aircraft. Long-term debt increased by €263 million net of repayments. Shareholders' funds on March 31st stood at close to €2 billion.

However, the strong results did not prevent the share price from slipping along with the rest of the market yesterday. Ryanair closed 20 cent down at €6.68.

Goodbody analyst Joe Gill said that the results were 1 per cent ahead of expectations. He added that despite the 17 per cent fall in the share price over the last six months, the results "give assurance that the model continues to deliver strong profitability while growing volume during record high oil prices and ex-fuel unit operating costs will continue to decline, furthering the airline's strategic advantages on European short-haul".